Michael Penhallurick v MD5 Ltd [2021] EWCA Civ 1770

2 December 2021

Michael Conway appeared for the Defendant (“MD5”), successfully opposing an appeal of the judgment of Hacon HHJ finding that MD5 was the proprietor of the literary copyrights subsisting in software.

The software, which was marketed by MD5 as “VFC” (Virtual Forensic Computing) was written by Mr Penhallurick, a former MD5 employee.  It allowed agencies, such as the police, to forensically examine computers without corrupting files.  Mr Penhallurick had sued MD5 for copyright infringement, asserting that he owned the software,  which he said been written in his own time, outside the course of his employment. MD5 denied infringement and asserted ownership of the copyright because the software was created by Mr Penhallurick in the course of his employment with MD5 and/or had been assigned to MD5 in a later agreement (referred to as the “November 2008 Agreement”).  MD5 also counterclaimed for infringement on the basis that Mr Penhallurick had made an adaption of the literary works.  At first instance Hacon HHJ had found that all of the VFC software had been written by Mr Penhallurick during the course of his employment and therefore belonged to MD5. Alternatively, he found that it had been assigned to MD5 by the November 2008 Agreement. He dismissed MD5’s counterclaim. Mr Penhallurick had appealed the Judge’s findings as to copyright ownership. MD5 cross-appealed against the Judge’s dismissal of its counterclaim.

The Court of Appeal dismissed Mr Penhallurick’s appeal.  Floyd LJ found that even if Mr Penhallurick had owned any of the copyright in the VFC software, he had assigned any existing and future rights to MD5 under the November 2008 Agreement. As such, it was not necessary to consider his appeal against the Judge’s finding that the software had been written in the course of his employment. MD5’s counterclaim was disposed of following Mr Penhallurick’s agreement that he would not object to an order for delivery up of infringing source code, if his appeal was dismissed.



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